Toronto’s annual event, the PDAC convention, held by the Prospectors & Developers of Canada, connects organizations and companies invested in the precious metals game. While the convention typically only stirs up mentions of big transactions, this year shows more tangible potential. Considering the hefty offers and transactions already made in the last quarter of 2022 and the beginning of 2023, analysts speculate a busy rest of the year as corporations challenge each other for the crown.
The most notable deal on the table whirring in the back of everyone’s minds is the Newmont Corp. offer to acquire Newcrest Mining Ltd for $16.9 billion. With mines in Nevada, Colorado, Quebec, Ontario, Mexico, Australia, the Dominican Republic, Ghana, Argentina, Suriname, and Peru, Newmont Corporation is one of the largest gold mining forces in the world. If this deal goes through, Newmont could double the gold output of one of its biggest competitors, Barrick Gold Corp., which recently offered Newcrest a similar acquisition for $18 billion but was turned down.
Meanwhile, companies like BHP Group Ltd., Rio Tinto Group, and Glencore Plc also entered the Prospectors & Developers Association of Canada with deals on the table. The industry uproar over the notable Newmont offer sparking additional transactions creates the perfect fertile grounds for a convention filled with deals and offers.
As thousands of mining investors, executives, bankers, and government officials gather over the next week at one of the industry’s biggest events, everyone will be thinking about mergers and acquisitions. The race to the top is fiercer than ever as supply pipelines tighten, inflation climbs, borrowing rates follow suit, and companies must do what it takes to continue growing.
“There [are] some really attractive prices out there right now from the standpoint of putting companies together,” Rob McEwen, the founder of Goldcorp and now the leader of McEwen Mining Inc., explains.
Newmont’s proposal at the beginning of February 2023 set the tone for the year because of its sheer size. If it were to go through, it would be the largest mining acquisition ever.
In quarter one of 2023, Bloomberg tracked $28 billion in mining takeover announcements, with Newmont’s nearly $17 billion offer accounting for more than half of the total. While the actual total number of proposals in the first quarter is less than the year prior, the weight of each has created momentum that many predict will spark high levels of activity, especially during and after the PDAC convention.
“The majority of our members are small-to-medium-sized companies, and the M&A in that space has not been particularly big recently,” Alex Christopher, the PDAC president, explains. “Clearly, a lot of them look to M&A for growth, though. They’re often trying to discover assets that a bigger company would later take on.”
A perfect example of this theory played out just last month with the successful acquisition of Sabina Gold & Silver Corp. by B2Gold Corp. for $809 million. Just a few months ago, B2Gold Corp. acquired Oklo Resources Ltd to expand its mining operations to Mali, West Africa. Its most recent acquisition of Sabina, though, will allow it to take over the Black River Gold District with 225 square miles of high-yielding claims.
One portion of the acquisition, the Goose Project, offers approximately 223,000 ounces of gold annually, which will allow B2Gold to increase its production by 25% with this claim alone. Based on these figures, it’s clear to see why so many corporations are desperate to acquire each others’ star producers.
Aside from gold and silver, the mergers and acquisitions in the battery metals field are also seeing an uproar as nations around the globe shift away from fossil fuels toward more environmentally friendly alternatives. The need for copper, lithium, and nickel continues spiking as car manufacturers, and other industrial players seek greener alternatives. For example, Teck Resources Ltd. announced in February that it plans to reduce its steel-making coal output to improve its copper yield this year.
With this industry shift comes a rarely-seen play; a few major car manufacturers have begun investing in raw metal producers. Stellantis NV recently purchased a 14% stake in McEwen Copper, while Tesla Inc. is considering an acquisition of Sigma Lithium Corp. General Motors Co. (GM) plans to spend $650 million on equity stakes in Lithium Americas Corp. while also competing over Vale SA.
Given all the offers and transactions over gold, silver, and battery metals thus far, 2023 is set to be an impressive year for mining deals.